If you observe the chart you included in the 09:00 to 11:00 time period, you will see why a 5, 13, 6 MACD is too slow for trending price action for the chart time frame used. I use faster MACD settings in my trading which do not cause that type of improper "read" of current price action shown with a 5, 13, 6 setting. Also, as shown in the chart example..Stochastics is a better indicator for catching price cycles within the context of price channel transitions.
What criteria did you use to do the drills? Looking at your green and red circles you seem to have used the Stoch (14,1,3) for entry. Jack mentioned in his posts in this thread about using the Stoch (5,2,3) as entry signal and Stoch (14,1,3) as continuation and exit signal. I removed all the indicators long ago (only use price, volume and 20 sma) but I am interested in seeing where this discussion goes. <img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1738252">
I've tried to follow Jack's recommendations: STO 14,1,3's %D 20% / 80% xos gating the STO 5,2,3's %K 50% xos. In the snippet: STO 14,1,3's %D crosses up the 20% enabling the following STO 5,2,3's %K crossing up 50% => long. As the STO 14,1,3's %D falls bellow 20%, this asks for a reversal back to short. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1738252>
An improvement (with some supplementary risk) seems to be to fall back to the previous sentiments not only when the slow STO crosses back bellow 20% (above 80%), but also when it crosses back the 50% line. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1738290>